Consider the following statements:
Statement I: The current account records all international transactions of assets such as money, stocks, bonds and government debt.
Statement II: Balance of trade is the difference between the value of exports and the value of imports of goods and services of a country in a given period of time.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Neither Statement I nor Statement II is true
Statement I: The current account records all international transactions of assets such as money, stocks, bonds and government debt. — False. Transactions in assets are recorded in the capital account. The current account records trade in goods and services and transfer payments.
Statement II: Balance of trade is the difference between the value of exports and the value of imports of goods and services of a country in a given period of time. — False. The balance of trade covers goods only. Services come under invisibles.
NCERT (2026-27): “6.1.1 Current Account Current Account is the record of trade in goods and services and transfer payments. …” “Balance on Current Account … Balance of Trade (BOT) is the difference between the value of exports and value of imports of goods of a country in a given period of time. …” “6.1.2 Capital Account … Capital Account records all international transactions of assets. An asset is any one of the forms in which wealth can be held, for example: money, stocks, bonds, Government debt, etc. …” |